Can HOA Fees be Discharged in Bankruptcy?

6555152005_0307deb6e5_zImage credit: Raquel Baranow

If you file for bankruptcy and owe back dues to a homeowners’ association, you are probably wondering whether or not any or all of those dues can potentially be erased by filing for bankruptcy.

Although they may not seem consequential in the grand scheme of things, homeowners’ association fees can stack up quickly, especially if you’re living in a community with a very active HOA and/or a development with a lot of amenities. It is a very valid concern to discuss these fees with your attorney during your New Jersey Chapter 7 bankruptcy case. Many people think that homeowners’ association dues and charges cannot be wiped out in a bankruptcy.

The fact is, you probably won’t be able to get all of your HOA fees discharged completely, but it is possible that you’ll be able to wave goodbye to at least a portion of your owed dues.

First, ask yourself a very important question: do you intend to keep your home or condo after your bankruptcy case is complete? If the answer is yes, you will most likely have to continue to pay your homeowner dues so that your chances of retaining the property are higher.

However, if you answered no, and you do not intend to keep your current home or condominium after filing for bankruptcy, you may be able to discharge your delinquent dues.

During your NJ Chapter 7 bankruptcy, you will be required to submit a form called Statement of Intention. This is where you will declare whether or not you intend to stay in your current residence during and after your bankruptcy, or whether you plan to surrender the property. Many people who find themselves filing for bankruptcy are doing so because their home mortgage payments have become too much to handle, and thus they surrender their homes in order to move forward with a much more affordable financial plan.

By surrendering your home, you will be able to discharge any and all homeowners’ association fees that were due up to the date of your bankruptcy filing. This is a relatively new occurrence; so you may receive some faulty information from a friend or coworker who has filed for bankruptcy in the past and was not responsible for any post-bankruptcy homeowner dues. To be clear: due to the increase in the number of foreclosures in recent years, there is currently a foreclosure “backlog” in most court systems. This means that homeowners’ associations could end up waiting possibly years to be repaid back dues from the proceeds of the foreclosure sale. Many times, the association doesn’t want to wait, and will demand payment from you for any fees and dues that accrue after you’ve filed for bankruptcy.

For more information on avoiding excessive HOA fees and other charges, contact NJ bankruptcy attorney, George Veitengruber, who can answer any and all of your questions and can help you find a way to stay in your home during and after a bankruptcy, if that is what you desire. Call the office today at (732) 695-3303!

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2 Responses to Can HOA Fees be Discharged in Bankruptcy?

  1. Pingback: Child Support and Bankruptcy: What You Need to Know | Veitengruber Law

  2. Pingback: Can I Lose My Home if I Stop Paying Property Taxes? | Veitengruber Law

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